Auditor: Probe of La. Citizens Insurance Corp. Has Been Blocked

June 25, 2007

Louisiana’s state legislative auditor said recently his investigators have been blocked in their probe of the state-backed “insurer of last resort” by the group whose staffers perform much of the insurance company’s work.

Steve Theriot said his investigators have been denied access to tax forms, computer records, contracts, payroll records and other records concerning Louisiana Citizens Property Insurance Corp., the state-backed property insurance company. Theriot said in a letter to state Sen. James David Cain that his office “has been advised that some records … are in danger of being altered or lost.”

At issue is a dispute between Theriot and the Property Insurance Association of Louisiana, an association of property insurers that contracts to perform work for Citizens, which has few employees of its own. Theriot believes that PIAL is subject to state “open meetings” laws, meaning his office should have access to its documents and records.

In May, Theriot asked the state attorney general’s office for a ruling on the matter.

PIAL argues that it is a private industry group, not public, and not subject to the open meetings laws.

“We are of the opinion that PIAL is not public or quasi-public under any laws,” A.J. Herbert III, a Baton Rouge-based lawyer for PIAL, said in a letter to the attorney general.

Theriot’s office is performing a series of audits on performance at Citizens. Among other things, auditors discovered that Citizens’ is unable to balance several years of bookkeeping.

They also found that the company lacks paperwork on most of the $300,000 it paid for expenses and consultant services from 2004-06. That money went to PIAL without proper contracts or documents to document $187,000 of that money, an audit found.

Cain, R-Dry Creek, chairman of the Senate Insurance Committee, received the letter from Theriot’s office on June 22. He informed colleagues of Theriot’s allegations on the Senate floor.

Rep. Karen Carter, chair of the House Insurance Committee, took the House floor to say she got a “disturbing call” from the auditor’s office on the same topic.

“They have been physically preventing the auditors access to these records,” said Carter, D-New Orleans.

Carter called a special meeting of her panel for the morning of June 26 to discuss the issue.

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